LOOPPNG (04.11.2015)
The O’Neill government had not progressed payments to LNG landowners since it took office in 2011, former prime minister Sir Michael Somare says.
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| Grand Chief Sir Michael Somare |
He referred to the 2009 contract between landowners and the State in the PNGLNG project and said it was “sad’’.
Sir Michael said, “It has been six years since the Somare government and the Beneficiary group landowners signed off on the Umbrella Benefits Sharing Agreement (UBSA) yet Mr O’Neill sees fit to treat them, Provincial government and Local Level Governments (LLGs) with contempt by using delay tactics and misinforming them on their benefits.”
Sir Michael said Mr O’Neill’s recent ‘assurances’ to LNG Landowners of a ‘better deal’ were mischievous and designed to mislead landowners.
He said “The Prime Minister should start delivering the benefit packages in the 2009 Kokopo Umbrella Benefits Sharing Agreement before offering more of his renowned empty promises.
“The 2009 Kokopo UBSA’s total benefits sharing package represents absolute value that stands at a staggering USD11Billion over 25 years - this could hardly be considered as ‘a raw deal’ as suggested by Mr O’Neill.
“An SGS (Société Générale) Open Book Economic Model 2009 and the PNG LNG Project Revised Financial Models 2011 for the project support this value proposition and my assertion,” said Sir Michael.
“There can be no excuse for Mr O’Neill, but to blame his own government’s internal process for the delay in landowner payments.’’
Sir Michael has previously reminded the Prime Minister to be truthful, fair and transparent about benefit packages owed to the impacted landowners, Provincial Governments and LLGs.
“This government has not paid a toea in royalty payments to the landowners since the very first cargo was exported in the beginning of 2014; it has not paid a toea in development levy payments to provincial governments during that same period; it has not paid one toea in the free carry equity payments, and it has been absolutely negligent in not moving the equity acquisition conversation forward with landowners and provincial governments to realize their dreams of acquiring additional direct equity interest in the PNG LNG Project which were the primary outcomes of the Kokopo UBSA.
“I am happy that Peter O’Neill recognizes and admits that the Somare Government offered landowners and provincial governments direct equity interest in the PNG LNG Project, however he is mistaken to think that the wording in the UBSA relating to ‘rated’ could be easily substituted with his own interpretation of ‘price’.
“In 2009 in Kokopo my Government agreed to sell down direct equity to the landowners, provincial government and LLGs at a value ‘rated’ at project completion (2014) at USD240million per 1 % equity is NOT the price - it is a pre-‘rated’ value,” said Sir Michael.
“I was advised in 2009 that landowners should pay no more than what IPBC pays as its contribution towards it equity holding of 19.4% in the PNG LNG Project. This 30% project financing equity contribution by the project owners of PNGLNG is quite distinct and separate from the debt financing component which represented 70% of the total project costs. Especially as this deal with the landowners was struck prior to Final Investment Decision and Financial Close with the financiers to the PNG LNG Project.
“Any departure away from the spirit and intent of benefit sharing would be considered as ‘unfair contract terms’ as all parties Including all owners of the PNG LNG Project including government only paid its equity contribution of 30% in the project as project debt was geared at 70%. The balance of 70% was borrowed and is presently being repaid by the LNG Project itself with very limited recourse to individual project owners including the State.
“So if the State through my Government paid only 30% secured from IPIC, why is O’Neill asking landowners and provincial governments to pay him a full commercial price at 100% of the 4.22% optional equity in the PNG LNG Project which is K2.5Billion?
“It would appear to me that the driver of O’Neill’s fixation on an exorbitant price of K2.5 billion is his own need to feed his government’s uncontrollable hunger for over-borrowing and over-expenditure at the expense of the ordinary people.
“There can be no denying that the 2015 National Budget documents at Volume 1 Economic and Development Policies confirms a price proposition by the O’Neill Government that appropriated the sell down of the State’s equity to the landowners and provincial governments at a staggering K2.5 billion to cover his government’s burgeoning financial disaster.
“Budgets appropriated by Parliament don’t lie!
“What is more amazing is that in the 2014 National Budget documents, the pricing that was proposed and appropriated by the same O’Neill Government was K700 million, which was recently supported and verified by the former Treasurer Don Polye.
“Don Polye’s Budget 2014 price consideration is closer to the number that my Government thought was fair and equitable to landowners to distinguish the option of acquiring additional State equity from the free carry equity right all the while taking into consideration the nature of the development forums’ objective of benefits sharing.
“In other words my Government committed to ‘non commercial pricing terms’, unlike what is now being proposed by the O’Neill Government 2015 National Budget Appropriation, and certainly not for the reasons to flatten O’Neill’s blooming debt and deficit problems,” said Sir Michael.
As Sir Mekere said last week, “The [O’Neill] Government has been on a populist spending spree for the last three years, spending money it did not have.”
Sir Michael said, “The Somare Government always intended for the price of the Beneficiary Groups 4.22% direct equity option in the PNG LNG Project to be reflective of the underlying intention of the development forum, and as such further reflect a price that truly captured the essence, spirit and intention of benefits sharing with the people whose land and resource we share.’’
Sir Michael cautioned Mr O’Neill saying “He must not be greedy or mislead the landowners as to what their true value consideration is, as I know what I gave them and he is doing everything to hide it and hijack it from them.”
Sir Michael urged landowners to be vigilant against a hostile and deceptive government and must demand from government what is rightfully owing to them. He said he would continuously prick the conscience of government to give what is owing to the landowners and provincial government and urges Peter O’Neill to be honest and truthful.
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